Ever felt like financial jargon was designed to confuse rather than clarify? Join us as we navigate the labyrinth of financial terminology, particularly within the infinite banking sphere. It's not just about learning by rote; it's about cementing a rock-solid financial strategy based on clear, precise language. By dissecting common misconceptions, we aim to transform your understanding from hazy to laser-focused, providing you with the tools to discern financial facts from fiction and proving that words matter.

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Journey with us as we illuminate the enigmatic world of life insurance company ratings, Comdex scores, and the lifeline that is the reserve fund. Grasping these concepts is not just about knowledge—it's about safeguarding your future dividends. Our personal stories bring these ideas to life, showing how life insurance company policies can influence your financial trajectory. We'll also equip you with a broader vision of the infinite banking concept, one that goes beyond dividends to a holistic view of accessible capital, cash value growth, and the profound benefits of a well-designed system.

Finally, become the architect of your own prosperity by mastering the finance tools at your disposal. As we explore the principles of disciplined savings and strategic capital use, you'll learn to cultivate a mindset that prioritizes wealth creation over mere accumulation. We invite your questions and curiosity, as they fuel our mission to empower you to make informed, confident financial decisions. So, let's transform your understanding of finance and pave the way to a thriving financial legacy.

And clarity in the fundamentals leads to clarity in your use of the whole strategy.

Join us as we continue the series through Becoming Your Own Banker with Part 2 on the Glossary of Terms.

IBC Glossary of Terms, ContinuedDefinition of Co-GenerationDefinition of ClassificationDefinition of Contingency FundDefinition of EarningsThe Fundamentals of Infinite BankingBook A Strategy Call

IBC Glossary of Terms, Continued

Definition of Co-Generation

This is a term used in conversations on electrical power that acknowledges that there are many sources from which to generate power within the distribution system, many of which are both producers and consumers of power. In other words, to generate the end product (electricity/power) there isn’t just one component, and it isn’t just producing. Many components within the system produce AND consume power before the final product is complete. 

Applied to banking, you can understand that in a properly working system, there are going to be times for capitalization (“producing”) and times for leverage (“consuming”). The process of banking is not just stockpiling, it is ALL functions of money. 

Definition of Classification

Webster’s Dictionary defines classification as “the act of grouping into classes that have systematic relations, usually founded on common properties.” In other words, we all classify things based on their major characteristics. Classification is a great tool because it can help us compartmentalize new information and fit it into what we already know. 

But when it comes to life insurance, there is a great challenge, which is laid out in Becoming Your Own Banker, to rethink your thinking. After all, it would be tempting to classify life insurance as any other insurance product and move on. But when we do this, we miss out on the chance to form a proper mental construct of what whole life insurance is and can do. 

Though life insurance is certainly insurance, whole life insurance with a dividend-paying mutual insurance company shares characteristics with banking, and should be classified as such. It just requires that you see things a little bit differently and dig a bit deeper.

Definition of Contingency Fund

This is the amount of money an insurance company retains as surplus after paying deat...